Philadelphia Indemnity Ins. v. Montes-Harris (2006) 40 Cal 4th 151

Bruce David Abel

Case Conclusion Date:December 1, 2006

Practice Area:Appeals

Outcome:Excess Ins. Co. May Have a Duty

Description:Mr. Abel represented a number of persons injured by a man driving a rental car who had purchased excess liability insurance. At the time the renter purchased the excess liability insurance, his out-of-state driver's license had been suspended; however, he denied knowledge of this. The insurance company took no steps other than to have its agent look at the driver's license to determine if the renter was qualified to drive and purchase insurance. It was argued that the insurer had an obligation to conduct an more in-depth investigation of insurability or waive the right to declare the policy void. The insurer did not do further investigation of the renter's insurability until after the acciden and then denied insurance coverage. Mr. Abel argued that the excess liability insurer had a duty, as a quasi-public entity, to conduct a reasonable investigation of the insurability of the renter within a reasonable time or waive the right to deny coverage. The Supreme Court decided that the issue of an excess liability insurance company's duty to investigate was best left to to the California Legislature.